EXPD Expeditors International of Washington Inc

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced record quarterly net earnings of $55,769,000 for the third quarter of 2005, compared with $43,107,000 for the same quarter of 2004, an increase of 29%. Net revenues for the third quarter of 2005 increased 17% to $281,925,000 as compared with $240,358,000 reported for the third quarter of 2004. Total revenues and operating income were $1,046,442,000 and $85,800,000 in 2005 compared with $897,188,000 and $67,420,000 for the same quarter of 2004, an increase of 17% and 27%, respectively. Diluted net earnings per share for the third quarter were $.50 as compared with $.39 for the same quarter in 2004, an increase of 28%. The company also reported that same store net revenues and operating income increased 17% and 27%, respectively for the third quarter of 2005 when compared with 2004. For the nine months ended September 30, 2005, net earnings rose to $138,157,000 from $112,563,000 in 2004, an increase of 23%. Net revenues for the nine months increased to $763,268,000 from $665,077,000 for 2004, up 15%. Total revenues and operating income for the nine months were $2,799,605,000 and $211,662,000 in 2005 compared with $2,382,704,000 and $174,474,000 for the same period in 2004, increases of 17% and 21%, respectively. Diluted net earnings per share for the first three quarters of 2005 were $1.24 as compared with $1.02 for the same period of 2004, an increase of 22%. Same store net revenues and operating income increased 14% and 21%, respectively, for the nine months ended September 30, 2005, when compared with the same period of 2004. "Execution and efficiency were the tale of this record quarter," said Peter J. Rose, Chairman and Chief Executive Officer. "While we continued to experience significant volume increases in air and ocean freight during the third quarter of 2005, our real profitability increases came from our ongoing efforts to increase productivity in the delivery of our services," Rose continued. "This has not been a one year story. If you go back to the third quarter of 2001, you would see that Expeditors has basically doubled in size in the last four years. That is a real accomplishment, particularly when you look at the magnitude of the numbers. And, we didn't really purchase this growth--we did it ourselves, organically. A stable environment fosters consistent, reliable and focused customer service by eliminating the distractions that employees in merged companies feel. As always, we'd like to formally acknowledge the contribution of each employee to these third quarter results. Once again, you really made it happen," Rose concluded. Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 164 full-service offices, 54 satellite locations and 7 international service centers located on six continents linked into a seamless worldwide network through an integrated information management system. Services include air and ocean freight forwarding, vendor consolidation, customs clearance, marine insurance, distribution and other value added international logistics services. -0- *T Expeditors International of Washington, Inc. Financial Highlights Three months and Nine months ended September 30, 2005 and 2004 Unaudited (in 000's of US dollars except share data) Three months ended Nine months ended September 30, September 30, ---------------------------------------------------------------------- % % 2005 2004 Inc. 2005 2004 Inc. ---------------------------------------------------------------------- Revenues $1,046,422 $897,188 17% $2,799,605 $2,382,704 17% ---------------------------------------------------------------------- Net revenues $281,925 $240,358 17% $763,268 $665,077 15% ---------------------------------------------------------------------- Operating income $85,800 $67,420 27% $211,662 $174,474 21% ---------------------------------------------------------------------- Net earnings $55,769 $43,107 29% $138,157 $112,563 23% ---------------------------------------------------------------------- Diluted earnings per share $.50 $.39 28% $1.24 $1.02 22% ---------------------------------------------------------------------- Basic earnings per share $.52 $.41 27% $1.29 $1.07 21% ---------------------------------------------------------------------- Diluted weighted average shares outstanding 111,390,617 111,206,168 111,595,346 110,480,254 ---------------------------------------------------------------------- Basic weighted average shares outstanding 106,868,687 106,255,293 106,791,564 105,663,441 ---------------------------------------------------------------------- Offices Opened during the 3rd Quarter of 2005 --------------------------------------------- FAR EAST EUROPE -------- ------ Laem Chabang, Thailand(b) Aberdeen, Scotland(a) Ningbo, China(a) Surabaya, Indonesia(a) Johor Bahru, Malaysia(a) Da Nang, Vietnam(b) (a)Full-service offices. Surabaya and Johor Bahru went from being satellites to full-service offices. (b)Satellite offices. Investors may submit written questions via e-mail to: investor@expeditors.com Or by fax to: (206) 674-3459 Questions received by the end of business on November 2, 2005 will be considered in management's 8-K "Responses to Selected Questions" expected to be filed on our about November 14, 2005. *T -0- *T EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data) (Unaudited) September December 30, 31, Assets 2005 2004 ------ ----------- ----------- Current assets: Cash and cash equivalents $461,443 $408,983 Short-term investments 96 109 Accounts receivable, net 714,112 614,044 Other current assets 15,440 22,724 ----------- ----------- Total current assets 1,191,091 1,045,860 ----------- ----------- Property and equipment, net 319,362 287,379 Goodwill, net 7,774 7,774 Other intangibles, net 9,433 10,839 Other assets 14,213 12,201 ----------- ----------- $1,541,873 $1,364,053 =========== =========== Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Short-term debt - 2,250 Accounts payable 479,298 410,251 Accrued expenses, primarily salaries and related costs 106,197 84,778 Deferred Federal and state income taxes 3,889 6,369 Federal, state and foreign income taxes 25,868 20,668 ----------- ----------- Total current liabilities $615,252 $524,316 ----------- ----------- Deferred Federal and state income taxes $33,311 $24,861 Minority interest $11,570 $7,472 Shareholders' equity: Preferred stock, par value $.01 per share. Authorized 2,000,000 shares; none issued -- -- Common stock, par value $.01 per share. Authorized 320,000,000 shares; issued and outstanding 106,704,124 shares at September 30, 2005 and 106,643,953 shares at December 31, 2004 1,067 1,066 Additional paid-in capital 12,121 44,678 Retained earnings 868,502 749,974 Accumulated other comprehensive income 50 11,686 ----------- ----------- Total shareholders' equity 881,740 807,404 ----------- ----------- ----------- ----------- $1,541,873 $1,364,053 =========== =========== *T -0- *T EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (In thousands, except share data) (Unaudited) Three months ended Nine months ended September 30, September 30, 2005 2004 2005 2004 --------------------------------------------------- Revenues: Airfreight $478,294 $406,754 $1,272,392 $1,100,231 Ocean freight and ocean services 383,975 335,908 1,018,053 859,063 Customs brokerage and other services 184,173 154,526 509,160 423,410 --------------------------------------------------- Total revenues 1,046,442 897,188 2,799,605 2,382,704 --------------------------------------------------- Operating expenses: Airfreight consolidation 377,758 315,694 992,465 844,075 Ocean freight consolidation 308,385 276,886 829,614 703,018 Customs brokerage and other services 78,374 64,250 214,258 170,534 Salaries and related costs 145,629 124,744 405,024 353,716 Rent and occupancy costs 13,993 12,711 41,198 38,077 Depreciation and amortization 7,840 6,806 22,782 19,558 Selling and promotion 7,059 6,769 21,725 20,388 Other 21,604 21,908 60,877 58,864 --------------------------------------------------- Total operating expenses 960,642 829,768 2,587,943 2,208,230 --------------------------------------------------- Operating income 85,800 67,420 211,662 174,474 --------------------------------------------------- Interest expense (14) (6) (262) (34) Interest income 3,031 1,436 7,903 3,700 Other, net 1,355 524 3,425 2,325 --------------------------------------------------- Other income, net 4,372 1,954 11,066 5,991 --------------------------------------------------- Earnings before income taxes and minority interest 90,172 69,374 222,728 180,465 Income tax expense 32,343 24,688 80,129 64,220 --------------------------------------------------- Net earnings before minority interest 57,829 44,686 142,599 116,245 --------------------------------------------------- Minority interest (2,060) (1,579) (4,442) (3,682) --------------------------------------------------- Net earnings $55,769 $43,107 $138,157 $112,563 =================================================== Diluted earnings per share $0.50 $0.39 $1.24 $1.02 =================================================== Basic earnings per share $0.52 $0.41 $1.29 $1.07 =================================================== Weighted average diluted shares outstanding 111,390,617 111,206,168 111,595,346 110,480,254 =================================================== Weighted average basic shares outstanding 106,868,687 106,255,293 106,791,564 105,663,441 =================================================== *T -0- *T EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three months ended Nine months ended September 30, September 30, 2005 2004 2005 2004 ------------------------------------- Operating Activities: Net earnings $55,769 $43,107 $138,157 $112,563 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for losses on accounts receivable 782 2,063 424 2,307 Deferred income tax expense 4,258 8,155 12,245 18,035 Tax benefits from employee stock plans 2,852 4,597 11,807 14,637 Depreciation and amortization 7,840 6,806 22,782 19,558 Gain on sale of property and equipment (811) (18) (856) (66) Impairment write down of other assets - - - 2,000 Other 775 860 1,068 2,408 Changes in operating assets and liabilities: Increase in accounts receivable (97,236) (72,797) (98,884)(147,409) Decrease (increase) in other current assets 9,015 (409) 7,269 (8,974) Increase in minority interest 2,087 931 3,757 2,750 Increase in accounts payable and other current liabilities 67,580 40,041 97,805 124,690 ------------------------------------- Net cash provided by operating activities 52,911 33,336 195,574 142,499 ------------------------------------- Investing Activities: Decrease in short-term investments 25 7 13 8 Purchase of property and equipment (22,967) (29,232) (66,159) (49,525) Proceeds from sale of property and equipment 1,082 153 1,331 440 Other 77 (1) (1,262) 227 ------------------------------------- Net cash used in investing activities (21,783) (29,073) (66,077) (48,850) ------------------------------------- Financing Activities: Borrowings (repayments) of short- term debt, net 37 3 (2,093) (210) Proceeds from issuance of common stock 21,153 14,949 32,228 26,440 Repurchases of common stock (30,153) (14,984) (80,166) (26,768) Dividends Paid - (16,055) (11,642) ------------------------------------- Net cash used in financing activities (8,963) (32) (66,086) (12,180) Effect of exchange rate changes on cash 405 931 (10,951) 320 ------------------------------------- Increase in cash and cash equivalents 22,570 5,162 52,460 81,789 Cash and cash equivalents at beginning of period 438,873 372,459 408,983 295,832 Cash and cash equivalents at end of period 461,443 377,621 461,443 377,621 ===================================== Interest and taxes paid: Interest 6 5 240 37 Income tax 10,297 7,459 38,857 34,206 *T -0- *T EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In thousands) (Unaudited) United Other Far Australia/ States N. East Europe New America Zealand --------------------------------------------- Three months ended September 30, 2005 Revenues from unaffiliated customers $199,139 25,354 616,305 133,297 12,372 Transfers between geographic areas $25,313 1,547 3,511 6,368 1,492 --------------------------------------------- Total revenues $224,452 26,901 619,816 139,665 13,864 ============================================= Net revenues $115,242 12,036 84,226 44,837 7,559 Operating income $27,769 1,759 43,513 7,911 2,075 Identifiable assets at quarter end $705,474 55,849 372,276 304,809 25,636 Capital expenditures $20,333 204 767 913 135 Depreciation and amortization $3,875 377 1,192 1,529 191 Equity $947,826 21,590 279,783 90,077 16,783 --------------------------------------------- Three months ended September 30, 2004 Revenues from unaffiliated customers $166,438 19,836 522,274 123,740 11,503 Transfers between geographic areas $19,254 1,267 3,000 4,778 1,366 --------------------------------------------- Total revenues $185,692 21,103 525,274 128,518 12,869 ============================================= Net revenues $96,495 11,215 68,925 41,288 6,636 Operating income $20,892 1,953 32,324 6,969 1,804 Identifiable assets at quarter end $660,037 43,787 251,407 265,921 21,517 Capital expenditures $23,516 354 3,570 854 165 Depreciation and amortization $3,383 307 1,084 1,290 173 Equity $827,659 16,548 180,835 75,683 13,769 --------------------------------------------- Nine months ended September 30, 2005 Revenues from unaffiliated customers $549,915 68,968 1,578,092 394,040 35,857 Transfers between geographic areas $60,939 3,894 9,359 17,366 4,139 --------------------------------------------- Total revenues $610,854 72,862 1,587,451 411,406 39,996 ============================================= Net revenues $311,261 36,231 211,777 131,731 21,328 Operating income $68,805 7,050 101,341 20,689 5,365 Identifiable assets at quarter end $705,474 55,849 372,276 304,809 25,636 Capital expenditures $56,770 716 2,917 3,432 672 Depreciation and amortization $11,097 1,106 3,578 4,541 517 Equity $947,826 21,590 279,783 90,077 16,783 --------------------------------------------- Nine months ended September 30, 2004 Revenues from unaffiliated customers $455,227 55,923 1,343,241 354,655 31,992 Transfers between geographic areas $50,536 3,014 8,187 13,098 3,799 --------------------------------------------- Total revenues $505,763 58,937 1,351,428 367,753 35,791 ============================================= Net revenues $266,206 31,180 188,474 118,332 18,275 Operating income $49,001 6,256 87,341 19,567 4,428 Identifiable assets at quarter end $660,037 43,787 251,407 265,921 21,517 Capital expenditures $31,013 1,405 8,211 5,175 741 Depreciation and amortization $10,054 876 2,877 3,737 474 Equity $827,659 16,548 180,835 75,683 13,769 --------------------------------------------- Latin Middle Elimi- Consoli- America East nations dated ------------------------------------- Three months ended September 30, 2005 Revenues from unaffiliated customers 14,500 45,475 1,046,442 Transfers between geographic areas 1,999 2,173 (42,403) - ------------------------------------- Total revenues 16,499 47,648 (42,403) 1,046,442 ===================================== Net revenues 7,095 10,930 281,925 Operating income 1,546 1,227 85,800 Identifiable assets at quarter end 26,573 43,848 7,408 1,541,873 Capital expenditures 330 285 22,967 Depreciation and amortization 312 364 7,840 Equity 9,798 20,635 (504,752) 881,740 ------------------------------------- Three months ended September 30, 2004 Revenues from unaffiliated customers 15,086 38,311 897,188 Transfers between geographic areas 1,569 1,753 (32,987) - ------------------------------------- Total revenues 16,655 40,064 (32,987) 897,188 ===================================== Net revenues 5,673 10,126 240,358 Operating income 1,165 2,313 67,420 Identifiable assets at quarter end 19,004 35,973 9,716 1,307,362 Capital expenditures 480 293 29,232 Depreciation and amortization 195 374 6,806 Equity 5,010 16,112 (373,946) 761,670 ------------------------------------- Nine months ended September 30, 2005 Revenues from unaffiliated customers 43,165 129,568 2,799,605 Transfers between geographic areas 5,437 5,956 (107,090) - ------------------------------------- Total revenues 48,602 135,524 (107,090) 2,799,605 ===================================== Net revenues 19,638 31,302 763,268 Operating income 3,987 4,425 211,662 Identifiable assets at quarter end 26,573 43,848 7,408 1,541,873 Capital expenditures 882 770 66,159 Depreciation and amortization 859 1,084 22,782 Equity 9,798 20,635 (504,752) 881,740 ------------------------------------- Nine months ended September 30, 2004 Revenues from unaffiliated customers 39,025 102,641 2,382,704 Transfers between geographic areas 4,668 4,595 (87,897) - ------------------------------------- Total revenues 43,693 107,236 (87,897) 2,382,704 ===================================== Net revenues 15,569 27,041 665,077 Operating income 2,433 5,448 174,474 Identifiable assets at quarter end 19,004 35,973 9,716 1,307,362 Capital expenditures 1,205 1,775 49,525 Depreciation and amortization 530 1,010 19,558 Equity 5,010 16,112 (373,946) 761,670 ------------------------------------- *T